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Julie Garber

Moving to Avoid Estate Taxes Revisited - New Hampshire Lawmakers Push for a State Estate Tax

By May 14, 2010

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New Hampshire Senate Bill 450-FN was amended last week to provide for an 8% estate tax on the estates of New Hampshire residents that exceed $2 million in value. The proposed New Hampshire estate tax would also apply proportionately to the estates of nonresidents that exceed $2 million in value and own real estate and/or tangible personal property located in New Hampshire. The tax would not apply to property passing to a surviving spouse or charity.

In The estate tax plan is a loser, three Concord attorneys, Robert A. Wells, John C. Ransmeier and Amy K. Kanyuk, write in opposition of the proposed New Hampshire estate tax for two main reasons:

  1. All other states located in New England - Connecticut, Maine, Massachusetts, Rhode Island and Vermont - collect a state estate tax. As a result, many New Englanders choose to reside in New Hampshire instead of one of its neighbors. Imposing a New Hampshire estate tax would drive wealthy residents out of the state and keep others from moving there in the first place.

  2. New Hampshire used to collect an estate tax as part of the overall federal estate tax bill through what is referred to as a "pick up" or "sponge" tax. This changed on January 1, 2005, when the pick up tax was officially phased out under federal law, but the pick up tax is scheduled to come back along with the federal estate tax on January 1, 2011. According to the Concord attorneys, revenues generated by the pick up tax would far exceed revenues generated by the proposed new tax, so they question why New Hampshire lawmakers are rushing to enact a separate estate tax when it is quite possible for the pick up tax to return in 2011.

With regard to the first reason, New Hampshire lawmakers need to take note. As I've written many times before, as an estate planning attorney who used to practice in the Washington, DC area and more recently in Florida, I work with several clients a month who want to establish their domicile in Florida where we have no state estate tax or income tax. Regardless of what "research" shows or what political agenda spin doctors want to spin, I have witnessed this again and again - the wealthy do move to minimize taxes because they have the resources to do so. Any future research on this subject should include a survey of estate planning attorneys across the country because we can review our files and answer how many of our clients have moved from states that collect estate and/or income taxes to states that don't. And the results will resoundingly show that many wealthy individuals do migrate to avoid taxes - for them it's just common dollars and sense.

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